New York Workers' Compensation Subrogation

NEW YORK WORKERS' COMPENSATION SUBROGATION

AND EMPLOYER LIABILITYAT A GLANCE
Michael D. Carr Joseph M. Nemo

1.Third-party situations.

Every time a worker is injured at work, there are at least two parties, namely, the worker and the employer, for purposes of workers' compensation litigation. However, when the worker is injured through the fault or negligence of someone who is not an agent of his employer, issues of workers' compensation subrogation and employer liability arises as a result of claims that may be brought against the negligent third party. These situations typically arise in automobile accidents, construction accidents, product liability accidents, premises accidents, and medical malpractice claims (Roach v. Hastings Plastics Corp., 456 N.Y.S.2d 675 (N.Y. 1982)).

2.New York’s complicated court system.

In New York the statewide trial courts with unique statewide jurisdiction are called Supreme Courts and the final appeals within the state go to the Court of Appeals. In addition, there are four judicial departments that each has its own appellate court and unique jurisdictions. The following is a hierarchy diagram of the New York civil court structure from the New York State Unified Court System web site:

2.Workers' compensation subrogation.

The employer by statute has an opportunity to separately pursue reimbursement of workers’ compensation benefits paid and payable if the injured worker has not done so within one year from when the action accrued or six months after the awarding of compensation whichever comes first, but only 30 days after the injured worker has been notified in writing by personal service or by certified mail that the failure to commence an action within 30 days will operate as an assignment of the claim to the employer. N.Y. Work. Comp. §29(1); Schlafani v. Eastman Kodak Co., 727 N.Y.S.2d 277 (N.Y. Sup.Ct. 2001).Otherwise, the employer can request the Court to use their discretion to allow the Employer to intervene and participate in the injured worker’s action, but regardless the employer has a lien on any award, judgment or settlement that is to be paid after the cost of collection is deducted. The injured worker is required to give notice of suit to the Chairman of the Compensation Commission within 30 days of commencement. N. Y. Work. Comp. §29(1). No settlement or satisfaction of judgment that would pay the employer less their full paid and payable exposure less cost of collectionis valid without the employer’s written consent or a court order after notice to the employer. N. Y. Work. Comp. §29(5); Snyder v. CAN Ins. Co., 762 N.Y.S.2d 131 (N.Y.A.D. 3 Dept. 2003).

3.Workers' compensation as an exclusive remedy.

Under N. Y. Work. Comp. §§11 and 29(6), an injured worker cannot sue his employer or a coemployee for anything other than workers' compensation benefits.

4.Employer liability or Coverage B exposure when there is a “grave injury” under N. Y. Work. Comp. §11.

When an injured worker suffers a “grave injury” pursuant to N. Y. Work. Comp. §11, a claim for pure uncapped contribution can be brought against the employer. See, Dunn v. Smithtown Bank Corp., 730 N.Y.S.2d 150(N.Y.A.D. 2 Dept. 2001). A ‘grave injury” includes death, loss of limb, paraplegia, blindness, deafness, severe facial disfigurement, loss of a nose, ear, or index finger, or a brain injury resulting in permanent total disability. N. Y. Work. Comp. §11. Similarly, the exclusive remedy will not apply if the employer has contractually agreed to indemnify the third-party tortfeasor. See, Wright v. Lichtman, 234 N.Y.S.2d 39 (N.Y. Sup. Ct. 1974).

5.Statutory distribution

Upon recovery from a third-party tortfeasor, either by way of trial or settlement, generally, the fees and costs are deducted from the award. The employer is then paid back the amount of workers’ compensation benefits paid less the proportionate fees and costs for their entire lien past and future. N. Y. Work. Comp. §29; Kelly v. State Ins. Fund, 468 N.Y.S.2d 850 (N.Y.A.D. 1983). It is important to note in cases where there is a large future workers’ compensation exposure, the employer’s obligation to pay proportionate fees and costs on their entire lien may exceed their present day recovery and require a payment by the employer to the injured worker. See, Kelly v. State Ins. Fund, 468 N.Y.S.2d 850 (N.Y.A.D. 1983); Cullen v. Truck Lease Corp., 351 F.Supp.2d 147 (S.D. N.Y. 2004). After the employer is paid, two thirds of the remainder goes to the injured worker. If the parties cannot agree as to the distribution of a settlement, the worker can request the court to allocate the proceeds of the settlement between the amounts recoverable and not recoverable under the Workers' Compensation Act in accordance with N. Y. Work. Comp. §29.

6.Uninsured and underinsured motor vehicle.

The employer has no right to recover workers= compensation paid and payable from an underinsured or uninsured motor vehicle policy. Shutter v. Phillips Display Co., 90 N.Y.2d 703 (1997).

7.Statutes of Limitations (Generally).

TYPE OF CLAIM / APPLICABLE LAW / TIME PERIOD
Personal injury / N.Y. C.P.L.R. §214(5) / Three years
Wrongful death / N.Y. E.P.T.L. §5-4.1 / Two years
Contract / N.Y. C.P.L.R. §213 / Six years
Medical malpractice / N.Y. C.P.L.R. §214(5) / Two and a half years from date injury was or should have been discovered.
Product liability / N.Y. C.P.L.R. §214(5) / Three years

8.Helpful Internet Links:

NAME/SUBJECT / WEB ADDRESS TO LINKS / NOTE
New York State Assembly / / Statutes
New York State Workers Compensation Board / / Rules, Regulations, and General Information for Employers and Injured Workers
The New York State Bar Association /
New York State Insurance Fund /
New York Court System / / Courts and Cases

DISCLAIMER: This summary is intended as an educational resource and is not intended to provide definitive answers. Consultation with the applicable laws and/or competent counsel should always be obtained.

500 Young Quinlan Building, 81 South Ninth Street, Minneapolis, MN 55402-3214, (612) 339-3500 FAX (612) 339-7655

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500 Young Quinlan Building, 81 South Ninth Street, Minneapolis, MN 55402-3214, (612) 339-3500 FAX (612) 339-7655

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